Hospitality Management
PR Newswire | October 18, 2023
Choice Hotels International, Inc. announced a proposal to acquire all the outstanding shares of Wyndham Hotels & Resorts, Inc. at a price of $90.00 per share, payable in a mix of cash and stock.
Under Choice's proposal, the $90.00 per share to be received by Wyndham shareholders would consist of $49.50 in cash and 0.324 shares of Choice common stock for each Wyndham share they own. Choice's proposal represents a 26% premium to Wyndham's 30-day volume-weighted average closing price ending on October 16, 2023, an 11% premium to Wyndham's 52-week high, and a 30% premium to Wyndham's latest closing price. In addition, Choice's proposal includes a cash or stock election mechanism, which would provide Wyndham shareholders with the ability to choose either cash, stock, or a combination of cash and stock consideration, subject to a customary proration mechanism. The proposal implies a total equity value for Wyndham of approximately $7.8 billion on a fully diluted basis. With the assumption of Wyndham's net debt, the proposed transaction is valued at approximately $9.8 billion.
Choice is making its latest proposal public following Wyndham's decision to disengage from further discussions with Choice, following nearly six months of dialogue.
Patrick Pacious, President and Chief Executive Officer of Choice Hotels, said, "We have long respected Wyndham's business and are confident that this combination would significantly accelerate both Choice's and Wyndham's long-term organic growth strategy for the benefit of all stakeholders. For franchisees, the transaction would bring Choice's proven franchisee success system to a broader set of owners, enabling them to benefit from Choice's world-class reservation platform and proprietary technology to drive cost savings and greater investment returns. Additionally, the value-driven leisure and business traveler would benefit from the combined company's rewards program, which would be on par with the top two global hotel rewards programs, enabling them to receive greater value and access to a broader selection of options across stay occasions and price points."
"A few weeks ago, Choice and Wyndham were in a negotiable range on price and consideration, and both parties have a shared recognition of the value opportunity this potential transaction represents. We were therefore surprised and disappointed that Wyndham decided to disengage. While we would have preferred to continue discussions with Wyndham in private, following their unwillingness to proceed, we feel there is too much value for both companies' franchisees, shareholders, associates, and guests to not continue pursuing this transaction. Importantly, we remain convinced of both the many benefits of the combination and our ability to complete it," concluded Pacious.
STAKEHOLDER BENEFITS
The proposed transaction is expected to provide important benefits for both companies' stakeholders – franchisees, shareholders, associates, and guests – that will be particularly significant in the current uncertain economic climate:
Franchisees Win with Lower Total Cost of Ownership and Increased Hotel Profitability.
Capitalizes on Choice's proven franchisee success system, dedicated to driving incremental topline reservation delivery to hotel owners' properties, while lowering the total cost of hotel operations.
Nearly doubles the resources available to spend on marketing and driving direct bookings to franchisees' hotels, lowering the cost of customer acquisition.
Establishes an even larger rewards member base on par with the top two global programs in hospitality.
Drives more business to franchisees through lower cost direct booking channels, lower customer acquisition commissions and fees, and lower hotel operating costs and technology-driven labor efficiencies, while continuing to determine their own commercial and pricing strategy.
Improves the value of franchisees' real estate assets by enhancing applicable cap rates and cash flows resulting from affiliation with the proforma company.
Reduces friction by offering guests a broad portfolio of brands across segments, no matter their stay occasions, within a single system.
Promotes increased investment and innovation in proprietary technology systems, processes, and training at the hotel and corporate level, which drives returns for Choice franchisees.
Creates an opportunity to replicate the tremendous success of Choice's recent acquisition of Radisson Hotel Group Americas. During the integration of the nearly 600 Radisson Americas hotels into the Choice platform, Radisson's franchisees have already meaningfully benefited from increased guest traffic to direct and digital channels, improvement in conversion rates, and access to more corporate accounts, among other benefits.
Shareholders Win with Superior Value Creation.
Represents a 26% premium to Wyndham's 30-day volume-weighted average closing price ending on October 16, 2023, an 11% premium to the 52-week high, and a 30% premium to the latest closing price.
Anticipates meaningful annual run-rate synergies, estimated at approximately $150 million, through the rationalization of operational redundancies, duplicate public company costs, and topline growth potential.
Enables Wyndham shareholders to benefit from Choice's historically 3x higher EBITDA multiple on a go-forward basis and receive deferred tax treatment on their stock consideration.
Creates additional capacity to further support Choice's revenue intense strategy, ultimately helping drive growth across its organic revenue levers.
Generates predictable high free cash flow through an asset-light, fee-for-service model, providing resiliency through all economic cycles and enabling additional investments for future growth.
Offers Wyndham two seats on the combined company's board and Wyndham shareholders the opportunity to participate in the significant upside potential of the combined company.
Cash/stock consideration mechanism enables Wyndham shareholders to choose between immediate upfront proceeds or long-term value creation, subject to a customary proration mechanism.
Guests Win with More Lodging Options and Value.
Creates a combined rewards program on par with the top two global programs in hospitality and will offer best-in-class program benefits through partnerships and compelling hotel redemption options.
Builds a global network of brands and hotels that meets the needs of the value-driven traveler across geographies, stay occasions and price points, supported by a seamless reservation system that provides guests with a more effective and efficient booking and shopping experience.
Improves data analytics, enabling the combined company to personalize communications and tailor recommendations to best meet the needs of the up to 160 million combined rewards program members.
Associates Win with Expanded Opportunities and Increased Stability.
Offers the ability to retain and attract "best-in-class" talent to one of the world's premier hotel companies focused on employee well-being, bringing together a wide range of experience and deep industry expertise.
Provides more opportunities for advancement and career growth as part of a larger, more diversified organization.
Combines two performance-driven cultures with a continued emphasis on associate development and growth.
RECENT ENGAGEMENT OVERTURES
Choice has been engaging with Wyndham for nearly six months.
In April 2023, Choice sent its initial letter to Wyndham regarding a potential transaction, proposing to acquire Wyndham for $80.00 per share, comprising 40% cash and 60% Choice stock. The proposal represented a 20% premium to the closing price of Wyndham common stock on April 27, 2023, and a 19% premium over Wyndham's 30-day volume-weighted average share price as of such date. Wyndham rejected the proposal and refused to engage in further discussions.
In the days and weeks thereafter, Choice continued to attempt engagement with Wyndham, increasing its proposal to $85.00 per share, comprising 55% cash and 45% Choice stock, explaining that further discussions could clarify Wyndham's hesitation to proceed with negotiations. The companies' respective Board Chairs and CEOs then met in person, and following that meeting, Choice improved its proposal yet again. Choice made its best and final offer which represented an increase of the per-share consideration to $90.00, comprising 55% cash and 45% Choice stock.
In September 2023, the Choice and Wyndham Board Chairs continued engagement, along with each of their respective financial and legal advisors. Wyndham acknowledged the strategic rationale of the proposal and that terms were within a negotiable range but raised questions regarding the value of Choice stock and timing for obtaining regulatory approvals. In response, Choice proposed to enter into a one-way, short-term non-disclosure agreement to facilitate Choice providing information that would address Wyndham's concerns (a draft of which was subsequently sent to Wyndham) and made its external counsel available for several discussions. However, during a follow-up call between the Chair of each company's Board and their respective advisors, Wyndham made clear their unwillingness to proceed with further discussions.
FINANCING, CONDITIONS AND APPROVALS
Closing of the contemplated transaction would be subject to satisfaction of customary closing conditions, including receipt of required shareholder and regulatory approvals. Choice would not make this offer if it were not confident that its franchisees and guests would embrace the proposed combination and that the transaction would receive applicable regulatory approvals in due course.
The cash portion of the purchase price is expected to be funded with a combination of cash on hand, as well as proceeds from the issuance of debt securities. Choice is highly confident in its ability to obtain fully committed financing based on indications from two separate bulge bracket global banks for the entire cash portion of our proposal. Strong free cash flows will allow for continued investments in the proforma business and rapid deleveraging of the balance sheet.
About Choice Hotels
Choice Hotels International, Inc. is one of the leading lodging franchisors in the world. Choice® has nearly 7,500 hotels, representing almost 630,000 rooms, in 46 countries and territories. A diverse portfolio of 22 brands that range from full-service upper upscale properties to midscale, extended stay and economy enables Choice® to meet travelers' needs in more places and for more occasions while driving more value for franchise owners and shareholders. The award-winning Choice Privileges® loyalty program and co-brand credit card options provide members with a fast and easy way to earn reward nights and personalized perks.
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Hospitality Management
IHG Hotels & Resorts | September 06, 2023
IHG Hotels & Resorts launches IHG LIFT, a program supporting under-represented groups in the US and Canada's hospitality industry.
IHG commits over $30 million in partnership with HBCUs, Clark Atlanta University, and Morehouse College. Together, they aim to remove barriers and create opportunities for diverse owner-entrepreneurs.
The program is integral to the Journey to Tomorrow 2030 responsible business plan. It aligns with IHG's commitment to promoting inclusivity and equal hotel ownership access.
IHG Hotels & Resorts (IHG), a global hospitality company, has introduced IHG LIFT, a program fostering diversity in hospitality. It provides support, capital access, and guidance throughout the hotel lifecycle for historically under-represented groups within the hospitality industry in the US and Canada.
IHG has partnered with Clark Atlanta University and Morehouse College, two prominent Historically Black Colleges and Universities (HBCUs). Over the next five years, the company has committed more than $30 million to support the IHG LIFT program.
This partnership represents a significant step toward eliminating barriers and creating opportunities for aspiring hotel owners, aligning seamlessly with IHG's commitment to diversity and equal access to resources and support.
IHG LIFT is an integral component of IHG's comprehensive Journey to Tomorrow 2030 responsible business plan. This broader strategy addresses critical issues and promotes inclusivity within the hospitality industry.
The program's primary objective is to unlock common barriers to hotel ownership among under-represented groups and empower diverse owner-entrepreneurs for success. By integrating IHG LIFT into this forward-thinking plan, IHG reaffirms its commitment to fostering a more unbiased landscape in the hospitality industry.
“As our industry grows, we need to keep our focus on enabling more success for our diverse ownership base. Barriers such as a lack of access to capital and the right networks put such owners at a disadvantage. The IHG LIFT program is specifically designed to help ease the path to ownership and ultimately support owners. Diversifying ownership is not only better for IHG, it also lifts up our entire industry.”
-Chief Development Officer, Americas at IHG Hotels & Resorts, Julienne Smith.
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Travel Technology, Hospitality Management
Business Wire | October 16, 2023
Hilton celebrated the grand opening of Spark by Hilton Mystic Groton, solidifying the company’s foray into the premium economy segment. With more than 400 opportunities in various stages of development, the first-ever Spark by Hilton made its debut just eight months after Hilton announced the new, conversion-only brand in January of this year.
Located less than half a mile from I-95, Spark by Hilton Mystic Groton is nestled in the historic maritime town of Mystic, Connecticut, with iconic landmarks including The Mystic Aquarium, Mystic Seaport Museum, Olde Mistick Village and the Mystic Bascule Drawbridge nearby. The hotel is also less than two miles away from local shops and restaurants in Mystic’s quaint downtown.
“In partnership with Distinctive Hospitality Group, we are thrilled to welcome guests into the very first Spark by Hilton. This breakthrough premium economy brand builds on Hilton’s continued work to develop new brands and provide a hotel for every traveler and every stay occasion,” said Matt Schuyler, chief brand officer, Hilton. “Spark is our fastest announcement-to-market brand in Hilton’s history, and we are excited to grow our portfolio of world-class brands with many more Sparks on the horizon.”
Spark by Hilton Mystic Groton features 120 comfortable and relaxing guest rooms and a seasonal outdoor pool. Other signature elements of Spark by Hilton hotels include:
A 24-hour retail market and a simple, complimentary breakfast, featuring premium coffee, juice and a signature bagel bar with spreads.
Public space with multi-functional seating from communal tables to rocking chairs, offering plenty of options for guests to enjoy breakfast, socialize or work throughout the day.
Guest rooms outfitted with practical amenities, including simple, streamlined furniture, an open closet, an in-room refrigerator, a multi-purpose work surface and a bright bathroom.
Simple, inspired design with splashes of color, vibrant exterior statement walls and energizing artwork.
“At Spark by Hilton, our approach to hospitality is all about ensuring that every traveler can enjoy exceptional quality without sacrificing affordability,” said Alissa Klees, brand leader, Spark by Hilton. “As we celebrate the opening of our inaugural Spark in Mystic, it marks the start of a journey to reshape travel and disrupt the premium economy segment while expanding our customer and owner base.”
The grand opening of Spark by Hilton Mystic Groton was celebrated today with a ribbon-cutting ceremony and remarks from Matt Schuyler, chief brand officer, Hilton; Alissa Klees, brand leader, Spark by Hilton; and Lou Carrier, president, Distinctive Hospitality Group. Photos from the grand opening event can be found here.
“Needless to say, we’re thrilled with being the first Spark by Hilton to be opened,” said Lou Carrier, president, Distinctive Hospitality Group. “We’re extremely confident the Mystic/Eastern Connecticut marketplace will present the diversified business drivers to allow our 120-room hotel to flourish. Additionally, we are already seeing an incredible mix of Hilton Honors members giving trial to the new brand as well as never before Hilton Honors members signing up to join the loyalty program. Hilton is clearly redefining the economy segment with Spark!”
Spark by Hilton Mystic Groton is part of Hilton Honors, the award-winning guest-loyalty program for Hilton’s distinct hotel brands. Hilton Honors members who book directly through preferred Hilton channels have access to instant benefits, including a flexible payment slider that allows members to choose nearly any combination of Points and money to book a stay, an exclusive member discount that can’t be found anywhere else and free standard Wi-Fi. Members also enjoy popular digital tools available exclusively through the industry-leading Hilton Honors mobile app, where Hilton Honors members can check-in, choose their room and access their room using a Digital Key.
About Spark by Hilton
The newest addition to the Hilton portfolio, Spark by Hilton is a premium economy hotel brand at the intersection of value and consistency. Spark by Hilton provides a reliable and comfortable stay with friendly service for every guest, all at an accessible price. Spark by Hilton hotels provide a welcoming sense of arrival with colorful accent walls and inspiring artwork. The public spaces provide multi-functional seating, from communal tables to rocking chairs, and guest rooms are comfortable and relaxing with simple, streamlined furniture. In the morning, travelers can enjoy a complimentary signature bagel bar and premium coffee.
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